Cryptoassets are traded on a global basis. Indeed, the markets are even more global and constant than markets in more conventional financial instruments, rivalled only perhaps by the FX markets in their reach.
The recent case of Re China Bozza Development Holdings Ltd [2021] HKLRD 977 demonstrated the attitude and increased scrutiny of the Hong Kong Companies’ Court towards offshore soft-touch provisional liquidation.
The leading authority on the meaning of soft-touch is the British Virgin Islands case of Re Constellation Overseas Ltd BVIHC (Com) 2018/0206,0207,0208, 0210 and 0212 . (§3) :
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Introduction
COVID-19 has had an unimaginable impact on the corporate world. The assumptions on which parties approached corporate transactions like Joint Ventures (JV) have often been blown off course. Businesses that are party to JVs must monitor not just themselves but the condition of their JV partner and the impact that they may have on the JV. There is no 'off the shelf' Joint Venture Agreement (JVA). Analysing the legal and practical rights and constraints in each JV is therefore essential.
Consider this situation: a dispute has arisen between two parties in relation to an agreement which is subject to an arbitration clause. Separately, a winding up application has been made against one of the parties to the arbitration in the jurisdiction in which it is incorporated. An arbitral award is obtained against the potentially insolvent company. That company has assets in Hong Kong, against which the creditor is now seeking to enforce their rights.
Foreign companies are frequently used to hold assets or other investments in Hong Kong. Some of these foreign companies are not registered under Part XI of the Companies Ordinance (“CO”) (“Unregistered Companies”). There are various reasons for not registering foreign companies in Hong Kong, including confidentiality and tax benefits. However, there may be some drawbacks to this approach.
Leisure Norwich (2) Ltd & Others v Luminar Lava Ignite Limited & Others - [2012] EWHC 951(Ch). Incurring liabilities to third parties is often necessary in order to carry out an effective administration of an insolvent company.